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British Gas Fined for Missing Green Energy Targets

Published on July 4, 2011

British Gas has been fined £1 million after admitting to Ofgem that it under-reported its supply of electricity to UK business customers, thereby putting it in breach of its commitment to renewable energy.

In an unusual turn of events, British Gas found a discrepancy in its reporting and brought it to the notice of energy regulator Ofgem.

Over a period of seven years, the business supply arm of the energy giant under-reported the actual amount of electricity it supplied by 0.62% – and this meaning the company should have been supplying more energy from green sources throughout the period.

This may not sound like a lot, but for company the size of British Gas, it’s very significant, and has put the company in breach of renewable energy targets.

According to regulators, UK energy suppliers must get approximately 10% of their power from renewable sources like wind, tidal or solar. The system relies on energy companies supplying documents known as Renewable Obligation Certificates, or ROCs, as proof. Failure to comply results in a penalty which is paid into a central pool.

So in addition to the £1 million for under-reporting, British Gas will also have to surrender a further £2.8 million plus interest in ROCs.

British Gas has, however, saved itself from a much more severe penalty by coming clean to Ofgem after realising the mistake and cooperating fully with the regulator.

Accurate energy reporting essential

The energy regulator’s finance director David Pimm, said in a statement, “Ofgem’s decision today, and our decision to impose an £8m penalty on National Grid Gas earlier this year sends a clear message to all energy companies that accurate reporting is essential across the energy sector.”

Moneyhighstreet comments: “This news will be a worry to customers on British Gas’s energyshare tariff, which matches the energy they use with energy from renewable sources – it’s a tariff that relies on accurate reporting.

“And while Ofgem’s decision won’t affect energy prices directly, there are strong indications that British Gas intends to raise its prices some time before its parent company, Centrica, publishes its results on 28 July.

“With an imminent price rise likely, consumers could consider a fixed price energy tariff. While these are usually more expensive than standard tariffs, they also protect you from price rises during your contract period. But if you want to lower costs immediately, you can also use a price comparison site to shop for the best deals.”